System for determining high quality musical recordings

ABSTRACT

A system for determining high quality musical recordings comprises a server computer which communicates with a plurality of client devices configured to execute internet radio client software which plays musical recordings. The server computer includes a registration unit for registering users; an input unit for registering, for each user, and for each musical recording of a selected group of musical recordings, a user&#39;s opinion of the musical recording. It also includes a combining unit configured to combine a user&#39;s registered opinion of each of the musical recordings with the registered opinions of other users, an input valuation unit configured to assign a valuation to the registered opinions on the basis of data from the combining unit, and a reward unit for providing a reward to one or more users on the basis of a valuation provided by the input valuation unit.

CROSS-REFERENCE TO RELATED APPLICATIONS

This application is a continuation of U.S. Non-Provisional patentapplication Ser. No. 10/117,356, filed Apr. 5, 2002. The entire contentsof the aforementioned patent application are incorporated herein byreference.

patent application Ser. No. 10/117,356 claims priority from U.S.Provisional Patent Application No. 60/281,673, filed Apr. 5, 2001 andpatent application Ser. No. 10/117,356 claims priority as acontinuation-in-part application from U.S. patent application Ser. No.09/691,316, filed, Oct. 18, 2000.

The entire contents of the aforementioned patent application areincorporated herein by reference, which claims priority from thefollowing United States Provisional Patent Applications:

-   -   Community-Based Market Movement Prediction: No. 60/160,044;        filed Oct. 18, 1999    -   Portfolio Management By Community; No. 60/166,430; filed Nov.        19, 1999    -   Clusters for Rapid Artist-Audience Matching: No. 60/165,794;        filed Nov. 19, 1999    -   A Mechanism for Quickly Identifying High-Quality Items: No.        60/176,154; filed Jan. 14, 2000    -   A Mechanism for Quickly Identifying High-Quality Items Version        000118: No. 60/176,953    -   A Mechanism for Quickly Identifying High-Quality Items Version        000216; No. 60/182,836    -   A Mechanism for Quickly Identifying High-Quality Items Version        000405; No. 60/194,988    -   A Mechanism for Quickly Identifying High-Quality Items: No.        60/200,204; filed Apr. 28, 2000    -   A Mechanism for Quickly Identifying High-Quality Items: No.        60/209,930; filed Jun. 7, 2000    -   A Mechanism for Quickly Identifying High-Quality Items: No.        60/218,866; filed Jul. 18, 2000    -   A Mechanism for Quickly Identifying High-Quality Items: No.        60/232,742; filed Sep. 15, 2000.

The entire contents of the aforementioned patent application areincorporated herein by reference. The entire disclosures thereof of theabove-enumerated United States Provisional Patent Applications,including the specifications, drawings, and abstracts, are herebyincorporated herein by reference.

The entire contents of U.S. patent application Ser. No. 09/714,789,filed, Nov. 16, 2000, are incorporated herein by reference, includingthe specifications, drawings, and abstracts, are hereby incorporatedherein by reference.

BACKGROUND OF THE INVENTION

1. Field of the Invention

The present invention relates to business methods, and to techniques andsystems for financing items through future sales rights. The inventionhas particular advantages when used to provide sales options forcopyrightable material such as entertainment recordings. The inventionfurther relates to a system to determine quality through resellingitems. The context for this invention is network-connected computersystems which allow a number of individuals to interact with a centralsystem for carrying out these sales.

2. Background

In the entertainment industry, manufacturers and distributors are facedwith fixed costs of manufacture, and distribution, regardless ofquantity or popularity of the entertainment product. This means thatthey must make an estimation of the future popularity and sales of theparticular item. While in some instances the manufacturer anddistributor have accurate predictive data, it is particularly difficultto predict the degree of acceptance and market success mostentertainment items will have.

Regardless, there are generally people who have a significant degree ofunderstanding of particular entertainment markets, and who can judge thepotential success of a particular item. These people may be willing toprovide financing for entertainment products in the particularentertainment markets. To the extent that these people can providefinancing and can provide good predictions of the performance ofentertainment products in the marketplace it would be desired to createa market structure which allows their knowledge and expertise to be usedfinancing create an economic incentive to manufacture or distributeentertainment, copyrightable or other products.

This invention is intended to hasten the identification of high-qualityitems by enabling those who are particularly good at identifying them tomake a profit from doing so. We do not distinguish between physicalobjects such as paintings and digital objects such as MP3 files exceptas noted below.

We assume the existence of objects such as musical recordings which mayor may not have value to a particular community. In the digital world,an MP3 may be in a genre that only a small subset of the population isinterested in. But, as a separate matter from the genre, it may or maynot have quality—quality that would motivate people interested in thatgenre to want to hear it.

BRIEF SUMMARY OF THE INVENTION

In accordance with the present invention, a method of optimizingvaluations of items in a market includes establishing values for theitems and providing a sequence of the items for which speculators mayinvest. The items are then sold to consumers of the items, or rights tothe items are transferred to consumers. The speculators who bought theincome rights to the items are then provided with income in accordancewith the income rights for the particular ones of the items sold to theconsumers or for the rights transferred to consumers.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is a flowchart showing the transfer of funds according to thepresent invention;

FIG. 2 is a diagram showing database tables in accordance with oneembodiment of the present invention;

FIG. 3 is a flowchart showing original owner creating RT's in accordancewith one embodiment of the present invention;

FIG. 4 is a flowchart showing a speculator buying RT's in accordancewith one embodiment of the present invention; and

FIG. 5 is a flowchart showing a consumer finalizing an RT in accordancewith one embodiment of the present invention.

DETAILED DESCRIPTION OF THE INVENTION

For the sake of simplicity, we will focus on one particular example—MP3files. But it must not be construed that this invention is limited tosuch files; it equally well applies to paintings, books, CD's and otherobjects which consumers may find appealing or unappealing.

A problem to be addressed is the fact that there are a huge number ofMP3's, most of them of very low quality regardless of the genre they mayhappen to be in. It takes time and effort to listen to many of theserecordings in order to find the gems. Those who perform that service—whowe shall refer to as “scouts” (or speculators)—should therefore have theopportunity to be rewarded for it.

One aspect of this invention is that the entity owning the MP3 is giventhe ability to sell a certain number of “rights” at a low price with theexpectation that these rights will be worth more later; the scouts wouldbe rights to the MP3's they think will be popular in the future with theexpectation of reselling them later for a profit.

The meaning of the term “rights” varies from embodiment to embodiment.Several variants that fall within the scope of the invention are listedhere, although this list is not meant to be exhaustive:

A right to download (RTD): Applicable for MP3 files or other digitalworks. The scout buys the RTD and resells it later at a higher price toa consumer, who actually does the download. A database keeps track ofwho owns the RTD at each point in time; sales are registered in thedatabase.

A right to experience (RTE): This is applicable in some circumstances toMP3 files or other digital works. For instance, in the context of asubscriber service, consumers do not necessarily own MP3's, but pay afee for the right to play them. A user can play any available song atany time, and it may be streamed from a remote server or it may exist onthe local audio or computer system. The subscriber may not pay for eachplay of a given song, but in the current scenario, some entity does—mostlikely, the organization providing the subscription service. Since eachplay therefore has value, scouts would be well-advised to buy RTE's at alow price before an artist is well-known, and resell them later—oftendirectly to subscription services—at a higher price when a demand hasbeen built. Thus, subscription services buy RTE's according to how manytimes users play various songs.

A right-to-buy (RTB): This is applicable to physical objects such asCD's. Scouts buy the right-to-buy a CD at a certain price (which may be$0; i.e., the purchase of an RTB may be the only necessary purchase. Itmay be non-zero to cover such aspects as shipping and handling, whichwould be fixed for the lifetime of an RTB). Scouts then resell the RTBto consumers at a higher price after a demand is established.

For short, we will call such variants RT's that is, “rights to . . . .”

In each case, there is a “finalization event.” For RTD's this occurswhen the object is downloaded. For RTE's, it occurs when the object isexperienced (for instance, a listener hears a streamed audio file once).For RTB's, it occurs when the physical object is bought (and/orshipped).

For purposes of example, we will focus on RTD's relative to songs, butexcept where noted the concepts apply equivalently to RTB's and RTE's.Also, they apply equally well to various formats in which digitalproperty can be encoded; some formats in fact may be superior to MP3'sfor profitable transactions due to built-in copy protection features;Liquid Audio is an example of a company marketing such technology.

Suppose a scout buys 1,000 RT's for a particular song at $0.10 each withthe expectation of selling them at a later time for $1 each. But supposethe owner of the song makes a large number of RT's available through anumber of channels at $1 each. This could very significantly slow therate of sales of the scout's RT's. In fact, if more RT's are madeavailable than there is a market for RT's, many of the scout's RT'smight never be sold. This means that after the scout buys RT's, hisfortunes are tied to subsequent management decisions on the part of theoriginal owners. So his profit is determined not only by his ownprescience in determining which new recordings are likely to becomepopular later, but also by the unpredictable decisions of the owners.

One factor making it hard to avoid this kind of problem is that themarket size for a particular song can not be exactly known in advance.This motivates the owner to make as many copies available as possiblethrough as many channels as possible. Moreover, a sale made by a scoutmeans the owner gets $0.10 for each copy; a direct sale means the ownergets $1 for each copy.

So the fortunes of the scouts and the fortunes of the owner are at odds.

This creates the possibility for trouble. Even if there is a contractstating that RTD's after the first 1,000 will be sold for $1 each, thefact is that if the owner violates the contract, the scouts could losemoney and be faced with the expensive prospect of suing for damages.

So, ideally, there should be a technique for eliminating this problem.Such a technique is a key aspect of the invention.

The solution provided by the present invention is to finalize the RT'sin sequence. For instance, if a scout buys the first 1,000 RTD's, hewill supply the first 1,000 RTD's which are downloaded. The originalowner may way to flood the market with direct-sale RTD's, but he cannotbe finalized until the scout finalizes his RTD's.

This mechanism even protects against the extreme case of an ownerselling RT's at $0.10 each and then subsequently direct-selling the RT'sfor an even lower price (which he might want to do, for instance, inorder to use that song as a loss-leader, building popularity, so that hecan sell other songs more quickly later).

If the owner then says he is going to flood the market with $0.05 RTD's,people will want to buy them at that price—but they won't be available.If the scout was right in his belief that demand would exist such thatconsumers would eventually want to pay a higher price, then theconsumers who are most eager to obtain the RTD's will buy them at thehigher price, since the alternative is not to have them at all, at leastfor a very long time. The scout, knowing this, can wait as long asnecessary to sell his RTD's at the higher price.

This mechanism therefore protects the scouts against decisions by theoriginal owners that could otherwise have a negative effect on thescouts. It applies equally well to RTE's, RTB's and other equivalentforms of RT's.

Any of a number of market mechanisms may be used to carry out the sales.For instance, blocks of some fixed number of RT's may be auctioned oneBay. (In fact, eBay has recently announced that it will make softwaremechanisms available for 3rd-party companies to set up auctions withoutdirect human intervention.) Or, market-maker software may be providedemulating the market-making techniques used in various stock markets. Inpreferred embodiments, the original owner controls how many RT's aremade available for sale to the scouts at any point in time.

In preferred embodiments, RT's may be sold in any order until thefinalization event occurs, at which time they are removed from themarketplace. That is, for example, and RTD for the 10,000th download maybe purchased before the RTD for the 5,000th download is purchased. Inpreferred embodiments, there is a free market for selling RT's. At anytime, scouts may buy them or such organizations as retail stores can bythem, without distinction.

(In some embodiments, consumers may buy them too, and subsequentlytrigger the finalization event for their own use. Interfaces areprovided for such purposes. For instance, in the case of RTD's, in somesuch embodiments each RTD has a unique identification number. When aconsumer purchases an RTD, the ID is presented to him by such means as aWeb interface or email. For instance, if a consumer purchases and RTDusing a Web site that operates according to standard Web retailingdesign principles, the ID can be presented after the purchase is paidfor by means of a confirmation Web page or in an automatically-sentemail. However, since consumers typically want immediate gratification,and the finalization event for a particular RTD might not be allowed forsome time, many embodiments will not include features for consumers topurchase RTD's.)

In some simple embodiments, the original owner simply sells RT's to thescouts at a fixed low price. In such cases, a fixed number of RT's areusually made available for this purpose; later RT's are made availableto consumers without first being made available to scouts.

Records representing the status of each RT are stored in a database(which may be a RAM-based data structure, a disk-based structure, or astructure in another storage medium). In various embodiments, there maybe one record per RT, or RT's may be represented in blocks. In mostblock-based embodiments, a record will represent a block of RTD'spurchased at one time by one scout. Other representations are equallyworkable and are equivalently included in the present invention.

In most embodiments, the database provides an indicator of availabilityof an RT. An RT is available if its current owner is willing to sell it.In some embodiments, the state of unavailability is indicated simply bydeleting the RT's record from the database. In others, there is a flagindicating availability or unavailability.

In most embodiments, an RTD is automatically made unavailable when adownload occurs. (Equivalently, in embodiments involving RTE's, the RTEis made unavailable when the experience occurs; in RTB's it happens whenthe object is bought.) In some cases, such as some embodiments involvingRTB's, an object may be made available again at a later date byswitching the flag. This is not the case for RT's which by virtue oftheir nature may only occur once.

In some embodiments, the original owner may choose, at any time, whetherthe next sequence of RT's is to be made available to scouts or toconsumers. In some embodiments this is accomplished by means of a“resellable” indicator in the database. If reselling is not allowed fora particular RT, then it is of no use to speculators and they won't wantto buy it.

In some embodiments, RT's for particular sequence numbers are notentered into the database until a commitment has been made to sell them;i.e., presence in the database indicates that the

However, preferred embodiments perform this function by means of“minimum price” data in the database, which may be stored with aseparate record for each RT or for blocks of RT's (or as an indicatorthat applies to all future RT's, at least until the indicator ischanged). If the minimum price is the maximum price the consumers arelikely to pay, then the RT will be of no use to scouts.

A central server (or set of servers working in concert) keeps track offinalization events.

The database contains information regarding the price for finalizationevents. In some embodiments, scouts and retailers can set thefinalization price for RT's they have purchased. In others, thefinalization price is fixed at the outset by the original owner. Inpreferred embodiments, scouts and retailers can set the price so long asit is under a maximum price fixed by the original owner, which may havea system-wide default if the original owner does not specify such aprice. This prevents one hostile scout or retailer from halting sales bysetting the finalization price of a RT so high that no consumer will buyit; since the RT's are finalized sequentially, lower-priced, subsequentRT's would then never be sold.

In preferred embodiments RT's may be purchased out-of-sequence; that is,for example, a particular scout may believe that a song will sell100,000 copies while most scouts think it will sell 50,000. Therefore inan auction setting, the scout or retailer may be able to buy the RT'sassociated with the 90,000th through 100,000th finalizations at abargain price compared to the earlier finalizations; if he is right, hemay make an exceptional profit. A user interface is provided whereby thescout or retailer can specify the range of finalization numbers he wantsto buy at a certain price; in most embodiments other scouts or retailersmay be given the chance to outbid him in an auction; i.e., it is madeknown via the user interface that someone has bid on a particular rangeof finalizations and the opportunity is presented to input counter-bids.Any standard auction mechanism such as Dutch auctions may be used forthis.

In some embodiments RT's don't have to be purchased in sequential blocksaccording to finalization sequence; for instance, scouts and retailerscan purchase every nth finalization between two numbers. This enablesthem to invest in a wider range of finalizations depending on howconfident they are in the number of RT's they expect to be sold withoutbuying a huge number of them.

In this preferred embodiment, song finalizations, that is, the actualdownloads, are for a fixed price. That way, the value of the nth RT issimply dependent on the perceived probability that n or more of the RT'swill be finalized. The owner of an RT cannot refuse a sale; when n−1thfinalizations have been sold, the nth one will be sold next.

The preferred embodiment draws a clear distinction between RT's andfinalizations (which may be a download or a purchase of a physical CD,or take other forms).

There is a speculator market for RT's.

In the preferred embodiment, there is not a speculator market forfinalizations. There is no need for the price of finalizations to bevariable. For consumer-friendliness—that is, for the sake of consumerswho just want their music and don't want to hear about speculation—andfor retailers that want to keep everything as simple aspossible—finalizations are sold as the associated objects always havebeen. Finalizations for CD-related RT's for instance, are sold on thesame fixed-price basis under which CD's can be purchased on Amazon.comIn fact, they may be sold through Amazon.com.

These prices will not be out of line with the norms for CD prices.

Since the normal fixed price for a finalization means that it would beabsurd for RT's to sell for more than that price, that creates a naturallimit for the price of RT's.

In this preferred embodiment, original owners can put any number of RT'son the speculator market at any time. They go into an auction, and willtherefore receive the highest price any speculator is willing to pay foreach RT. Further trades of RT's take place in a market setting.

It is to be expected that RT's associated with finalizations that arefar in the future will sell for less than RT's associated withimmediately upcoming ones.

For example, say 100,000 copies of a CD have been sold, and the originalowner now decides to sell more RT's to the speculators. It is extremelylikely that at least 100,001 CD's will be sold, so the price for thenext RT is likely to be very close to the regular price for the CD.However, if the speculator decides to sell 900,000 RT's, then the “IPO”price for the 1,000,000 one might be very, very low, because it may notbe at all obvious that the CD will ever sell 1,000,000 copies. Thespeculator's skill—the area in which they make their profits—is injudging how many copies a particular work will sell. Our sequentialapproach, described in my most recent patent application, greatlyenhances the ability of a speculator to profit from that skill; itremoves many factors that could distort his profits.

Since RT's are finalized in sequence, if a consumer buys an RT from thespeculators market, he may not be able to finalize it for some time.

But there is a queue where consumers can buy the next RT to befinalized, separate from the speculator's market—actually they are notreally buying an RT at all, they are buying a finalization, which willbe immediate because they are buying the next finalization.

Example 1

An original owner wants to make 100,000 RT's available for sale for aparticular item, for instance, a recording of a particular song thatwill be downloaded. The price will be the same for every download,$0.25. He wants to sell 10,000 downloads directly, but since he isn'tsure that the song will sell more downloads than that, he makessubsequent download available to the speculator's market. See FIG. 2.The original owner causes 90 records to be entered into database tableRTTable (1), each of which represents a sales unit of 1,000 RT's. Statusfor every record is set to Avail (meaning that the RT is available to bepurchased). SpeculatorID is set to null. ItemID is an identifier of theparticular song that will be downloaded. (We will assume it is 104).

That is, this table may contain RT information for many different songs;the ItemID allows us to associate a particular record with a particularsong. Each record has a unique (within the ItemID) SeqNo in the range of11 to 100. That is, SeqNo's may not be unique in the overall table, butcombined with the ItemID comprise a unique key into the table. Theystart at 11 in this case because the original owner has alreadycommitted the first 10,000 downloads to be sold by him directly.FinalizedCount is set to 0 because none of the RT's represented by thisblock have been finalized yet. See FIG. 3.

A set of auctions is arranged, through methods similar to those on eBay,whereby these blocks of 1,000 RT's are sold. In fact, the auctions couldbe conducted on eBay.

Now, at some point soon after the song has been released a speculator,represented in SpeculatorTable 2 by the record with SpeculatorID=452,comes to believe that the song is going to sell 100,000 copies. Heplaces a bid on the block represented by the record with ItemID 104 andSeqNo 100.

Assume he wins the auction with a bid of $100. Now Status is set toPurchased, and RTTable.SpeculatorID is set to 452. See FIG. 4.

Before and after this purchase, other speculators will have beenpurchasing other blocks.

Separately, downloads are available to consumers. The first 10,000 haveno effect on our database because they were not in the speculator'smarket. Subsequent downloads update our database. Continuing with ourexample of speculator 452, assume that the 90,001st download occurs. TheRTTable record with ItemID 104 and SeqNo 100 is retrieved andFinalizedCount is changed to 1. The record is saved back into thedatabase.

This change to the database represents the fact that one download hasbeen conducted against speculator 452's block. Each time a downloadoccurs after that, FinalizedCount is incremented for the same recorduntil it reaches 1,000. (By that point the original owner may haveentered some more RTTable records to represent succeeding downloads, orhe may sell succeeding ones directly).

When FinalizedCount reaches 1,000, the SpeculatorTable record withSpeculatorID 452 is retrieved and payment for 1,000 downloads, is madeinto his bank account. This payment is $250 minus some processing fees,which in our example happen to be 5%. So $237.50 is deposited into thebank account, and he has made a net profit of $137.50 for correctlyidentifying that 100,000 downloads would occur. See FIG. 5.

Note that Example 1 is only to be considered as an example. To list afew of the many variations that could occur: Different numbers ofdownloads can be represented by a record other than 1,000, including,for example, 1. Instead of representing downloads, the records mayrepresent listens to a song (RTE's), or RTB's. Instead of purchasing theRT's with money, the RT's could be purchased with some other valuablesuch as points earned by doing a useful service. (For example, on theEmergent Music web site, http://www.emergentmusic.com, points are earnedby accurately rating music and by recommending music that otherssubsequently find to be worthwhile.) The subsequent payment, however,could be in money, or in points that have some other kind of value. Asanother variation, the original owner could share in the profits of eachfinalization; that is the consumer may pay $0.25 for a download, where$0.0125 went to transaction fees and $0.10 went to the original owner,leaving $0.1375 for the speculator. Many other variations are possible.

FIG. 1 shows the operation of an exemplary embodiment of the presentinvention. In order to establish a market, first a financial right isdetermined 13. The financial right is established as a right which canbe sold. This becomes a right which is the subject of the transaction,referenced as RT 15. The RT can be a right to download (RTD) 21, a rightto experience (RTE) 22 or a right-to-buy (RTB) 23.

A finalization event is defined and the finalization event takes place25. The finalization event may be one or more of object downloaded 31 inthe case of an RTD, object is experienced 32 in the case of an RTE orphysical object is bought 33 in the case of an RTB. The finalizationevent is deemed a purchase 35 of the RT.

The finalization events are permitted to occur in a sequential order.That order is established as a sequence, so that the RT's are finalizedin the sequence 37. The RT's are then sold 39, and records representingstatus of each RT are stored 41 in a database.

FIG. 2 is a diagram showing database tables in accordance with oneembodiment of the present invention. An RT table 61 and a speculatortable 62 are shown. The RT table 61 includes an item ID, a sequencenumbers, a status indication, a speculator ID, and a count of finalizedtransactions. The speculator table 62 includes a speculator ID whichshould correspond to the speculator ID of the RT table. The speculatortable 62 also includes a name, address and bank account for thespeculator identified in the speculator ID.

FIG. 3 is a flowchart showing original owner creating RT's in accordancewith one embodiment of the present invention. As can be seen, theoriginal owner decides to make a particular number of RT's available.These appear as the item ID in the RT table 61. The RT's are provided inblocks as desired by the original owner. The corresponding rows areadded to the RT table with sequence numbers. The items in each row aregiven the appropriate values in the RT table.

FIG. 4 is a flowchart showing a speculator buying RT's in accordancewith one embodiment of the present invention. The speculator decides tobuy a particular block of RT's. The record is then updated in the RTtable.

FIG. 5 is a flowchart showing a consumer finalizing an RT in accordancewith one embodiment of the present invention. The consumer causes thefinalization of the RT. The RT table is then updated for that particularsequence number.

1. A system for determining high quality musical recordings, comprising:a server computer which communicates with a plurality of client devicesconfigured to execute internet radio client software which plays musicalrecordings; said server computer comprising: a registration unit forregistering users; an input unit for registering, for each one of saidusers, and for each musical recording of a selected group of musicalrecordings, said user's opinion of said musical recording, wherein saidselected group of said musical recordings comprises musical recordingsfor which said user has provided input representing an opinion; acombining unit configured to combine a user's registered opinion of eachmusical recording of said selected group of musical recordings with theregistered opinions regarding said musical recording of others of saidusers; an input valuation unit configured to assign a valuation to theregistered opinion of each of said users on the basis of data from thecombining unit; and a reward unit for providing a reward to at least oneof said users on the basis of the valuation provided by the inputvaluation unit of at least one registered opinion of said at least oneof said users.
 2. The system of claim 1, wherein said reward is a prizedelivered to said at least one of said users.
 3. The system of claim 1,wherein at least one of said opinions is registered based on inputreceived from a client device communicating that the user thereof hasperformed the act of skipping over part of said musical recording whilelistening to said internet radio client software.